Real or made up Rollercoaster
October 17th 2008 04:04
Novice Stock market investor (NT) :
So what is my objective when investing in shares ?
Experienced Trader (ET):
Well if you can turn a capital profit over a reasonable time of somewhere between 5 & 10 percent and each stock you invest in that would be a good average.
NT : So you mean if the stock I buy rises by 7% say then i should maybe consider selling and if one I am looking at buying falls by 7% I should buy as long as its a safe company of course.
ET : Exactly, it does get more complicated when you do more trades but thats the basic
NT : and what time frame a mont, a year ?
ET : Those figures would be averaged out over a year so your portfolio should increase by capital value by 7% each year minimum. Less than that really isn't worth it.
NT : So if I could do that each day I guess I could make a lot of money
ET : Yes but the stock market doesnt do that, it as a much more conservative flow either up or down.
NT : In recent weeks it has gone up following a Governement annoucement and then fallen back the following day by that magnitude.
ET : Yes but these are uncertain times and everyone is worried.
NT : About what exactly, the world isn't about to close. It seems to me that as a result of the market dropping dramatically the governements around the world responded by putting up lots of money and protections.
ET : Yes well they cant afford for the eccomony to collaspe so have a lot more to lose than they are investing.
NT : This has inspired big investors to buy stocks wholesale at the lower prices thus restoring the market by upto 10 %
ET : Yes
NT : and then they are selling the following day wholesale and the market collaspes again
ET : umm yes
NT : and so the net effect of this investment is a 10% capital gain in one day
ET : Yes I suppose
NT : but then the governments see their actions have not solved the problem and put up more protection and invest in capital works to stimulate the ecconomy
ET : Yes as this is kind of another way to help
NT : which in term inspires the big investors to buy stocks and raise the market to the same level as the previous rise ie another 10% rise but the actual price is the same
ET : Yes I see where you are heading with this
NT : and then they sell making another 10 % capital gain in one day. Does this mean they can retire for 12 months having made 2 years worth of above average gains in 2 days of trade without actually increasing the price of their stocks beyond their normal price.
ET : So what are you saying ?
NT : I think the current market rollercoaster will continue on until governments realise they are creating a new problem rather than solving an exisiting one if they continue and that big investors are much smarter than the governements given them credit for.
ET : Are you sure you are a Novice Investor ?
So what is my objective when investing in shares ?
Experienced Trader (ET):
Well if you can turn a capital profit over a reasonable time of somewhere between 5 & 10 percent and each stock you invest in that would be a good average.
NT : So you mean if the stock I buy rises by 7% say then i should maybe consider selling and if one I am looking at buying falls by 7% I should buy as long as its a safe company of course.
ET : Exactly, it does get more complicated when you do more trades but thats the basic
NT : and what time frame a mont, a year ?
ET : Those figures would be averaged out over a year so your portfolio should increase by capital value by 7% each year minimum. Less than that really isn't worth it.
NT : So if I could do that each day I guess I could make a lot of money
ET : Yes but the stock market doesnt do that, it as a much more conservative flow either up or down.
NT : In recent weeks it has gone up following a Governement annoucement and then fallen back the following day by that magnitude.
ET : Yes but these are uncertain times and everyone is worried.
NT : About what exactly, the world isn't about to close. It seems to me that as a result of the market dropping dramatically the governements around the world responded by putting up lots of money and protections.
ET : Yes well they cant afford for the eccomony to collaspe so have a lot more to lose than they are investing.
NT : This has inspired big investors to buy stocks wholesale at the lower prices thus restoring the market by upto 10 %
ET : Yes
NT : and then they are selling the following day wholesale and the market collaspes again
ET : umm yes
NT : and so the net effect of this investment is a 10% capital gain in one day
ET : Yes I suppose
NT : but then the governments see their actions have not solved the problem and put up more protection and invest in capital works to stimulate the ecconomy
ET : Yes as this is kind of another way to help
NT : which in term inspires the big investors to buy stocks and raise the market to the same level as the previous rise ie another 10% rise but the actual price is the same
ET : Yes I see where you are heading with this
NT : and then they sell making another 10 % capital gain in one day. Does this mean they can retire for 12 months having made 2 years worth of above average gains in 2 days of trade without actually increasing the price of their stocks beyond their normal price.
ET : So what are you saying ?
NT : I think the current market rollercoaster will continue on until governments realise they are creating a new problem rather than solving an exisiting one if they continue and that big investors are much smarter than the governements given them credit for.
ET : Are you sure you are a Novice Investor ?
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Summer Banks
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